Mace & Jones helps secure landmark House of Lords ruling

Published: 22nd June 2006

Mace & Jones partner and litigation specialist Richard Corran who represented Celtec and the National Council for education & training in Wales, in the case, Celtec v Astley & Others ([2006] UKHL 29), said the fact it had reached the House of Lords reflected its seriousness and complexity.

Mr Corran said following the Lords judgement both employers and employees should be aware that a transfer of employment pursuant to the transfer of undertakings regulations cannot be postponed by the consent of the parties.

The Lords interpreted a European Court of Justice (ECJ) decision that a transfer of undertakings occurs on the date when "responsibility as employer for carrying on a business of the unit in question moves from the transferor to the transferee" as meaning that an employee - the 'unit' in the ECJ's statement - could be transferred even though it was not intended by the parties for the transfer to occur until later.

"The wider implication of this ruling is that the date of transfer of undertakings cannot be changed by the will of either party with or without consent,' said Mr Corran. "The fact that neither the employees or employer intended the employees to transfer at a particular time, does not mean it didn't occur."

The case, Celtec v Astley & Others ([2006] UKHL 29), revolved around the exact date an employer transfers business undertakings for the purposes of protecting an employee's rights under the Acquired Rights Directive 77/187/EEC and the Transfer of Undertakings (Protection of Employment) Regulations 1981, which transpose the Directive into national law.

The dispute arose between Newtec, a North Wales training and enterprise council now known as Celtec, and a group of employees who were seconded to it for three years from the Department of Employment in 1990. After the secondment finished in 1993, the employees chose to stay on as Newtec employees, rather than return to the civil service and Newtec subsequently argued that this is the date their employment started. However, the employees argued that as the 'Tecs' were a government initiative, the transfer had taken place over a period of time between 1990 and 1993. This entitled them to longer continuous service with Celtec and thus improved redundancy entitlements.

After a 1999 Employment tribunal decision in favour of the employees, a 2001 Employment Appeal Tribunal decision backing Celtec, and a subsequent reversal in the Court of Appeal, the House of Lords passed the case on to Strasbourg, which decided that the date of employee transfer is "a particular point in time which cannot be postponed to another date at the will of the transferor or transferee." Although this decision came down on the side of Celtec, the ECJ decided this date was dependent on the date the 'responsibility for the unit" is transferred and both parties accepted this was when the secondment began in 1990.

In the Lords, the employees argued that if this was the case then they were employed by Newtec/Celtec from 1990 and any decision to permanently join from 1993 should be viewed as "continuous service" as they were remaining with the same employer. Celtec argued that this was a new line of argument that should not be allowed at this late stage of proceedings but if it was, requested the case go back before the Employment tribunal.

Dismissing Celtec's appeal, Lord Hope said it was "the duty of the national court to give them [the employees] that opportunity [to present the new line of argument] in view of the ECJ's ruling." In light of this Hope LJ, backed by three other lawlords held "that the respondents had continuous employment with Celtec from the start of their employment with the civil service by virtue of the Acquired Rights Directive".
Mr Corran said that after eight years Celtec had "effectively won the argument" over the transfer of undertakings occurring on a set date, which had been clarified by the European Court of Justice.

Mace & Jones background
Mace & Jones is one of the largest law firms in the North West, with 35 partners and a total of 100 fee earners.

The firm has three offices - in Liverpool, Manchester and Knutsford and has a national as well as a regional reputation in commercial matters including employment, commercial property, construction, corporate work, dispute resolution and insolvency. It also has one of the best private client teams in the region.
Corporate services include business acquisitions and disposals, venture capital deals, management buy-outs and buy-ins, joint ventures and commercial agreements.

The employment team, one of the largest and most experienced in the UK, provides in-depth understanding of UK and European employment law issues.

Commercial property advice covers all aspects of sales and purchases of freehold and leasehold land, as well as handling leases of office buildings and industrial premises, joint ventures, funding projects and development work. The department is particularly well known for its work in the urban regeneration field.
Commercial litigation includes all types of contract dispute, injunction and intellectual property matters.

Insolvency is also a specialism; advice is given on corporate rescue strategies and environmental liabilities.

BREAKDOWN OF WORK %
Commercial property 25
Employment 20
Commercial litigation/insolvency/construction 15
Company/commercial 15
PI/private client/family 25